Thursday, June 7, 2012

There is no alternative. It gives me great pleasure to watch a country with as many intellectual resources as Germany attempting to solve the insanely difficult problem of transitioning out of a fire-based and nuke-powered economy. The truth is, humanity really doesn't have a choice in this matter—either we solve this problem or we perish. And there really are only a couple of industrialized countries that have any chance of success so I have chosen to watch the Germans try. Unfortunately, like all efforts on the leading edge, this project will run way over budget and trigger secondary problems that will cause frustrating delays. Got to cover these as well—because the ultimate advantage of being second is that these are the costs and delays the copycats can avoid.

What follows here is a description of the social costs of expensive green electricity that is increasingly unaffordable to the society's poor. Such problems must be solved just like any of the other technical problems of conversion.

The Move to Renewables

Germany's Nuclear Phase-Out Brings Unexpected Costs

The German government was quick to approve a phase-out of nuclear power in the country after the Fukushima nuclear disaster. Now the costs of moving toward renewable energy are just being realized, and low-income consumers are paying the price.

After two weeks, the first letter arrives. The second notice comes a week later. On the fourth week, the bell rings and a technician from the power company, Vattenfall, is at the door. He has a black toolbox under his arm and he means business.

Aminta Seck, 39, has been through this twice before. If she doesn't pay the technician at least part of what she owes the company, he'll disconnect her electricity, leaving Seck and her three-year-old son Liam sitting in the dark in their two-room apartment, without lights, a working stove, refrigerator or TV.

Electricity prices in Germany have risen by more than 10 percent since the current coalition of the center-right Christian Democratic Union (CDU) and business-friendly Free Democratic Party (FDP) took office. The price hike has been too much for some like Seck, an unemployed decorator from Berlin's Prenzlauer Berg district.

"Approximately every tenth household currently has problems paying for rising energy costs," says Holger Krawinkel at the Federation of German Consumer Organizations.

About 200,000 recipients of Hartz IV, Germany's benefits program for the long-term unemployed, had their power cut off last year because of unpaid bills, according to Paritätische Gesamtverband, an umbrella association for social movements in Germany.

The consumer protection organization for the federal state of North Rhine-Westphalia estimates that number to be as high as 600,000 per year. Ulrike Mascher, president of VdK, an interest group focusing on social justice, uses terms such as "fuel poverty" and a "blatant violation of fundamental social rights," when talking about the issue.

Meanwhile, the next price hikes are just around the corner. "The cost of electricity will rise, there's no question about that," says Jochen Homann, head of Germany's state-run Federal Network Agency.

The federal Economy Ministry calculates internally that prices will increase by between three and five euro cents per kilowatt hour within the next 12 months, in order to finance renewable energy subsidies and grid expansion. Those increases amount to an additional annual burden of between €105 and €175 ($130 and $220) for a family of three.

Consumer protection advocates and interest groups focusing on social issues blame the federal government for these increases. In particular, they say, the unchecked expansion of highly-subsidized photovoltaic installations is driving prices up, without the benefit of creating a commensurate increase in supply.

The CDU-FDP coalition itself has long wanted to cut back on funding for solar energy, but the Bundesrat -- Germany's upper house of parliament, which represents the individual federal states -- voted against the measure. It is unlikely lawmakers will reach a compromise on the issue before their summer recess this year.

More than a year has passed since the Fukushima nuclear reactor disaster in Japan prompted Germany's lower house of parliament, the Bundestag, to vote to gradually phase out the country's nuclear power plants, replacing them wherever possible with renewable energy sources. Yet it is only now that a serious discussion is beginning over the costs of the nuclear phase-out.

Chancellor Angela Merkel made the transition to renewable energy a top priority after dismissing her environment minister, Norbert Röttgen, last month, but essential questions remain unanswered. Who will pay for this supposed "joint effort," in Merkel's words? What's the upper limit on costs? And when will voters' positive view of the nuclear phase-out give way to frustration over rising costs?

"I am very concerned about the way energy prices are growing," says Economy Minister Philipp Rösler of the FDP, discussing what he describes as a "battle to keep energy affordable." Thomas Bareiss, who coordinates energy policy issues for the parliamentary group of the CDU and its Bavarian sister party the Christian Social Union (CSU), predicts: "We're going to see a major debate over who pays for the transition to renewable energy."

The last thing the chancellor wants, especially with parliamentary elections coming up next year, is to open herself up to accusations that she lacks a sense of social justice or is indifferent to social issues. Leading figures within her coalition are pondering ways to combat the steady rise in energy prices, and to divert attention away from the failures over the past 12 months.

Their list of proposed solutions ranges from reducing energy costs for low-income consumers, to a new program that would earmark billions of euros for renewable energy sources and energy storage capacity. "We can't allow electricity to become a luxury," says new Environment Minister Peter Altmaier of the CDU, who also said he intends to meet as soon as possible with representatives from social welfare organizations. more

I recently had a conversation with a serious member of the German Environmental Ministry. She assured me that I would probably like the replacement for Norbert Röttgen, the recently fired environmental minister who was quite popular around here. I reserve the right to change my mind but the new guy seems organized, down-to-earth, and technologically literate. I might like this guy too. Well, read for yourself.

Environment Minister Peter Altmaier

'We Can't Allow Electricity to Become a Luxury'

06/06/2012

After a year of little progress in Germany's so-called energy revolution, Chancellor Merkel recently reshuffled her cabinet to give it some fresh impetus. In a SPIEGEL interview, new Environment Minister Peter Altmaier discusses the need to inject reality into rosy assumptions and defuse anger sparked by the turnaround's costs.

SPIEGEL: Mr. Minister, Chancellor Angela Merkel sacked your predecessor, Norbert Röttgen, in mid-May after his embarrassing loss in the elections in North Rhine-Westphalia. However, she claimed the real reason for his firing was the lack of progress he had made in implementing Germany's ambitious plan to abandon nuclear energy by 2022 and get 80 percent of its power from renewable sources by 2050. What did Röttgen do wrong?

Altmaier: I think he did a lot of things right. He tried to give environmental policy a higher status. That wasn't easy, especially at the beginning of his term in office, when it was decided to extend the life spans of (Germany's) nuclear power plants.

SPIEGEL: If everyone was so happy with Röttgen, why is Merkel looking to make a fresh start in Germany's energy revolution?

Altmaier: The chancellor has said we need new momentum in the energy turnaround. That's my impression, as well. Ushering in this turnaround was the right thing to do, but we're behind schedule in a number of areas, such as expanding the power grid. We can't afford to let that happen.

SPIEGEL: The fact that you've now been appointed Germany's new environment minister doesn't change the fact that the plan for the energy revolution has flaws. For example, there's still no energy ministry or energy coordinator in the Chancellery.

Altmaier: The energy turnaround is a project that demands political leadership from many sides. But it's also true that the coordination between various actors -- between the ministries and between government and industry -- could have been better in the past. By changing environment ministers, we now have an opportunity to overcome such obstacles.

SPIEGEL: There are already some politicians in the business wing of your party, Merkel's center-right Christian Democrat Union (CDU), who are calling for Germany's nuclear power plants to remain in service after 2022 if the energy turnaround hasn't succeeded.

Altmaier: Even the business wing of my party has accepted the energy revolution -- but it also has to succeed. So, it's my job to reduce the friction with the business community over environmental policy.

SPIEGEL: The Environment Ministry is known for sugarcoating reality, for example, by assuming that power consumption will decline despite what is actually an upward trend. Based on these kinds of forecasts, how do you intend to completely reorganize the power supply of a large industrial nation within just a few years?

Altmaier: The energy turnaround can succeed, but only if it's based on realistic basic assumptions. Every single one of our brochures mentions that we intend to obtain 35 percent of our electricity from renewable energy sources by 2020. Whether we reach this goal, and what we have to do to achieve it, obviously depends on how high our power consumption will actually be in 2020. Only someone who can realistically estimate this will also know what measures need to be taken to achieve this objective.

SPIEGEL: So, what are you going to do about these estimates?

Altmaier: I've ordered my staff to review, before the summer break, the forecasts that we've been working with so far, particularly with regard to what we have and have not achieved. This concerns our expectations for future power consumption as well as energy-saving scenarios, for example, from enhanced energy efficiency. What's more, we will carefully re-examine our goals for expanding the use of renewable energy sources. Companies will only invest in the switchover if they view our goals and forecasts as realistic.

SPIEGEL: Your description fosters the impression that Chancellor Merkel had nothing to do with the wasted first year in the energy revolution.

Altmaier: The mere fact that there have been shortcomings doesn't mean that the first year in the energy turnaround has been wasted. Granted, the expansion of the power grid and the expanded use of renewable energy sources haven't been sufficiently coordinated. And although we have far exceeded our goals related to expanding solar energy, we still have a long way to go in terms of (power) networks. This has led to a situation in which, in many cases, the power can't be transmitted to consumers.

SPIEGEL: The problems with expanding the power grid have started with getting the electricity generated by offshore wind turbines in the North Sea to land. The major stumbling block has been TenneT, the Netherlands' state-owned grid operator, which complains that it can't come up with the €15 billion ($18.7 billion) in needed investments. Does that mean that Germany's government has to come to the rescue?

Altmaier: Let's not get ahead of ourselves. Before we talk about serious measures, such as the government's buying a stake in all this, I'd like to point out that TenneT simply has a contractual obligation to fulfill. But there is one point on which the state might be able to help: on the issue of the liability risk for a faulty or delayed connection to the power grid. On this point, I intend to work with Economics Minister Philipp Rösler to jointly propose a reasonable solution before the summer break. more